Code of Maine Rules
18 - DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES
125 - BUREAU OF REVENUE SERVICES
Chapter 805 - COMPOSITE RETURN FILING
Section 125-805-.01 - DEFINITIONS

Universal Citation: 18 ME Code Rules ยง 125-805-.01

Current through 2024-38, September 18, 2024

A. Code. "Code" has the same meaning as in 36 M.R.S. §111(1-A).

B. Composite return. "Composite return" means the Maine income tax return filed by an entity in accordance with this rule on behalf of some or all of its partners, beneficiaries, or shareholders who are "eligible persons," as defined in Section .01(D) below.

C. Electing small business trust. "Electing small business trust" ("ESBT") has the same meaning as given to that term by the Code § 1361(e).

D. Eligible person. "Eligible person" means a person that elects to participate in a composite return by completing the required Nonresident Member Affidavit and Agreement to Participate in a Composite Filing of Maine Income Tax (Form 941CF-ME) that is:

1. an individual who is a nonresident individual for the entire taxable year, and whose entire Maine adjusted gross income, including a spouse's income in the case of married individuals filing a joint federal return, is from one or more entities and the individual elects to participate in the composite return filed by each entity;

2. that portion of a federally recognized ESBT or Qualified subchapter S trust that consists of holdings of stock in an S corporation; or

3. a nonresident trust or nonresident estate that has its entire Mainesource income for the taxable year from one or more entities, would have included such income as Maine taxable income if it were to file an income tax return for that year, and has not distributed any of its Maine-source income for the taxable year to its beneficiaries as distributable net income.

E. Entity. "Entity" means a partnership, limited partnership, limited liability partnership, estate, trust, or S corporation. "Entity" also includes a limited liability company classified as a partnership or S corporation for federal income tax purposes.

F. Entity income. "Entity income" means an eligible person's distributive share of the net income of an entity, apportioned to Maine in accordance with 36 M.R.S., Chapter 821. For purposes of this rule, entity income does not include an eligible person's distributive share of net income of an entity, apportioned to Maine in accordance with 36 M.R.S., Chapter 821, if that eligible person's distributive share of the net income of the entity is less than zero.

"Entity income" for an ESBT means the ESBT's distributive share of net income of an S corporation taxable pursuant to the Code § 641(c), and apportioned to Maine in accordance with 36 M.R.S., Chapter 821. If an ESBT holds stock in more than one S corporation, the entity income of each stock holding must be determined separately for purposes of this rule.

G. Qualified subchapter S trust. "Qualified subchapter S trust" ("QSST") has the same meaning as given to that term by the Code § 1361(d)(3).

H. Tiered entity structure. "Tiered entity structure" means an arrangement in which some or all of the interests in one entity ("lower tier entity") are held by another entity ("upper tier entity"). A tiered entity structure may have two or more tiers.

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